Honda Incentives Hit Record High,Toyota May Follow

This was the third month in a row where Honda raised incentives spending with last month being a record high

On the flip-side, domestic manufacturers such as GM and Chrysler may be cutting incentives spending in future months due to a decrease in production.

Toyota, on the other hand, is in a tough situation which may force it to follow Honda's lead and increase incentives.

Toyota spent an average of $1,362 on incentives per vehicle sold in June. We predict this figure will creep up in the coming months.

Toyota built several manufacturing plants in the US over the last few years on the false assumption sales would be healthy. That hasn't turned out to be the case.

Unlike GM and Chrysler, Toyota can't just shut down these plants. They don't want to lay off their workers since that would ruin Toyota's image as a generous US employer.

So it looks like Toyota is going to be producing a lot more cars than it can sell. The only way to move these cars is to raise incentives. Look out for higher rebates and better financing deals from Toyota over the next several months.